A firm has an initial capital of $8 million. The current opportunity cost of capital for the firm is 10%. The firm has t
Posted: Wed Mar 30, 2022 3:41 pm
A firm has an initial capital of $8 million. The current
opportunity cost of capital for the firm
is 10%. The firm has the opportunities to invest $9 million that
gives an average return of 30%.
Consider two-period perfect certainty model.
a. Find Net Present Value of the Investment.
b. Find the value of the firm before the investment decision is
made.
c. Find present value of the firm after the announcement of
investment decision.
opportunity cost of capital for the firm
is 10%. The firm has the opportunities to invest $9 million that
gives an average return of 30%.
Consider two-period perfect certainty model.
a. Find Net Present Value of the Investment.
b. Find the value of the firm before the investment decision is
made.
c. Find present value of the firm after the announcement of
investment decision.